NACWA Legal Alert (Leg07-04)

Member Pipeline - Legal - Alert (Leg 07-04)

To: Members & Affiliates, Legal Affairs Committee
From: National Office
Date: June 28, 2007
Reference: Legal Alert 07-04

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On June 25, the U.S. Supreme Court ruled in National Association of Home Builders v. Defenders of Wildlife (DoW) that the U.S. Environmental Protection Agency (EPA) is not required to consider the potential effects on endangered species when it approves state National Pollutant Discharge Elimination System (NPDES) permitting programs. The Court’s decision closely tracks the legal arguments made by NACWA in its February 2007 amicus curiae brief. The Court held that the Clean Water Act (CWA) specifically outlines the factors controlling EPA’s approval of state NPDES programs and rejected arguments put forth by DoW that the Endangered Species Act (ESA) supersedes or appends these factors. In particular, the Court ruled that EPA is not required to consult on the implications of its approval with the Fish and Wildlife Service, or to condition its approval to insure that the state program will not jeopardize an endangered species or habitat. The Court’s decision clarifies that so long as a state’s NPDES program satisfies the nine CWA Section 402(b) criteria, EPA has a non-discretionary duty to approve the program and withdraw federal permitting authority.

This Alert summarizes the Court’s decision and its implications for NACWA members. A copy of the decision is available in the Litigation Tracking section of NACWA’s Member Pipeline. NACWA’s participation in this case was supported by the Association’s Targeted Action Fund (TAF). NACWA worked with Legal Affiliate Williams Mullen to draft the amicus curiae brief, and also received assistance from Legal Affiliate English, Lucas, Priest, and Owsley. Please feel free to contact NACWA’s General Counsel Alexandra Dunn at 202/533-1803 or with any questions regarding this case, or NACWA’s ongoing legal activities.

I. Background

In 2003, EPA approved Arizona’s NPDES permitting program. Several parties, including DoW, challenged EPA’s decision in the U.S. Court of Appeals for the Ninth Circuit, arguing that EPA’s approval was improper because while the Arizona program may have met CWA Section 402(b)’s nine factors, the Agency failed to properly consider the effect of its approval on endangered species under the federal agency consultation provisions of ESA Section 7(a)(2). The challengers also asserted that during its review and approval process, EPA had taken inconsistent positions regarding the Agency’s need to consider impacts on endangered species.

The Ninth Circuit issued its 2 to 1 decision on August 22, 2005 (DoW v. EPA, 420 F.3d 946). The court held that EPA’s approval of Arizona’s NPDES program was improper because it violated the requirements of the ESA. The Ninth Circuit went through a multi-step process in reviewing EPA’s actions regarding the Arizona program. The court first found that the delegation was “not the result of reasoned decision making” because EPA poorly explained its decision. The court second conducted a full-scale review of EPA’s authority under the ESA when making decisions under the CWA, and concluded that “the obligation of each agency to ‘insure’ that its covered actions are not likely to jeopardize listed species is an obligation in addition to those created by the agency’s own governing statue” (emphasis added). Third, the court ruled that EPA delegation to Arizona was improper because EPA did not sufficiently consider the consultation requirements of ESA Section 7(a)(2) – essentially adding a tenth factor to the nine expressed in the CWA for delegation. The effect of the court’s decision is that the ESA trumped the CWA factors for NPDES authority delegation. The court vacated EPA’s approval of the Arizona program.

EPA and the National Association of Homebuilders filed petitions for certiorari with the U.S. Supreme Court on September 6, 2006 requesting review of the Ninth Circuit’s decision. On January 5, 2007, the Supreme Court granted certiorari in the case.

In January 2007, NACWA’s Board of Directors authorized the Association to file an amicus curiae brief in the case because of the implications of improper extension of the ESA to CWA activities for NACWA member agencies. As noted above, NACWA’s February amicus curiae brief with the Court asserted that the CWA Section 402(b) criteria are the only factors EPA need apply when deciding whether to approve a state NPDES program. NACWA’s brief also noted that EPA’s regulations limit the Agency’s analysis to the nine CWA criteria. In addition, National Marine Fisheries Service and the Fish and Wildlife Service (the Services) regulations provide that the ESA’s prohibition on harming protected species applies only to discretionary federal actions. Because EPA’s approval under the nine CWA factors is non-discretionary, the brief argued that the ESA can not apply to EPA’s approval of state NPDES programs.

II. The Supreme Court Opinion

The Supreme Court’s June 25 opinion adopts NACWA’s analysis of the case in large part. Writing for the majority, Justice Alito noted the seemingly irreconcilable commands of the ESA and the CWA in this case. The Court found that the ESA did not explicitly modify the nine statutory criteria of CWA Section 402(b). Thus, the ESA could only add an additional criterion to the CWA by implication. The Court stated that statutory amendments by implication are not favored, and thus concluded that CWA Section 402(b) is unaffected by the ESA.

The Court went on to consider the Services’ regulations regarding the applicability of the ESA to federal actions. The Court found that the conflict between the mandate of the ESA and the mandates of other statutes, including the CWA, creates an ambiguity that the Services were entitled to interpret through notice and comment rulemaking. The Court reviewed the Services’ interpretation of the ESA as applicable only to discretionary federal actions as reflected in the Services’ regulations. Finding this interpretation reasonable, and that the Services’ applied the regulations when reviewing EPA’s approval of the Arizona NPDES program, the Court found the Services’ interpretation entitled to Court deference. The Court also rejected the Ninth Circuit’s conclusions regarding EPA’s inconsistent positions during its analysis of the Arizona NPDES program. The Court noted that an agency is free to change its mind during the decision-making process so long as the final result is rational.

Accordingly, the Court reversed the Ninth Circuit’s decision, confirming that EPA properly looked only to the requirements of the CWA when deciding whether to approve Arizona’s program.

III. Impact on NACWA Members

The outcome in this case provides a substantial clarification of the reach of the ESA for NACWA and its membership. In cases where a federal agency has no discretion under its authorizing statute, the requirement for no jeopardy to endangered species does not apply. Accordingly, NPDES permitting procedures should continue normally for NACWA members, without the concern of the ESA adding to CWA requirements. The Court’s ruling as to the ESA was quite broad, and may eventually have applicability to other environmental statues, although the exact extent is not yet clear at this time.

This case represents an important victory for NACWA members by ensuring that the CWA remains the nation’s primary environmental statute dealing with NPDES permitting issues. The Association will continue to track any developments and keep the membership informed.